Are newspapers doomed? You decide

Dan Sabbagh, media commentator for The Times, is baffled by the fact that Johnston Press has such a low share price - its lowest since 2001 - yet enjoys "the best profit margins in the business" and "has been reporting the best advertising market for the past two years." He writes:

Something is not right here. You can buy Johnston shares today at eight times this year's profits on a business that requires minimal capital investment with monopoly brands dotted all around the country. Nor is Johnston exceptional. If you like the
Daily Mail, you can buy one of the bits that
Viscount Rothermere does not own for ten times this year's profits; the
Daily Mirror, and its parent company, are available at eight times too. This is cheap, ludicrously cheap.

He also points out that Richard Desmond, who bought the Express group for £125m, has made millions for himself through the acquistion. "It does show", he writes, "it is possible to make money from newspapers."

So why is there so much gloom about the newspaper business? Rightly, he dismisses the notion that Google is the main problem. Though circulations are falling "a bit", online readership is up. Cover price increases have increased revenues without any noticeable effect on sales "despite the rise of freesheets." And "even the Evening Standard has managed to stabilise, after the onslaught of the afternoon giveaways."

Overall, Sabbagh concludes, "Britain remains a country of newspaper readers". That seems to be the feeling - and the practice - among my students too. On Monday, during a lecture in which was predicting the end of newsprint and urging them to engage wholeheartedly with the digital future, I asked for a show of hands on how many read at least one newspaper a day.

A forest of hands went up among the 150 or so in the lecture theatre, only a quarter of whom are taking the newspaper course. The rest are on are radio, TV and magazine courses. Nor were too many of them, if any, convinced by my advocacy of online collaborative journalism. Clearly, they like inky things just the way they are, and are eager to engage with it. Traditional, mainstream journalism is their aim.

All of this would give heart to the O'Reillys, père et fils, who have given short shrift to commentators, like me, who think print's death is imminent. Gavin O'Reilly said as much in Manchester on Sunday, reminding us that Rupert Murdoch also thinks newsprint has a lengthy - and profitable - future.

However, I remain unconvinced. The owners of the spin machines are spinning away, playing - as ever - with statistics. Regional newspaper sales are falling off a cliff. That's a fact, and that's why Johnston Press's share price is down. I happen to think the company is making a brilliant fist of the transference from print to screen, having invested wisely in multi-platform journalism. But its board can see where the future lies and, during this transitory stage, it has to accept that analysts remain sceptical.

Turning to the national papers, there is no doubt that "headline" sales suggest that we might have reached a circulation plateau. But look beneath the headlines. Full-rate sales are down on a year ago. Lesser rate sales are way up on a year ago. Multiple copy sales (aka bulks) are up on a year ago. Foreign sales are slightly up on a year ago. In other words, the underlying circulation trend remains as depressed as ever.

What about advertising? According to the Advertising Association'sAdvertising Statistics Yearbook 2007, advertising in the UK passed £19bn in 2006 and the press got the lion's share (43.7%) compared to TV (24.1%), direct mail (12.2%), the internet (10.6%), outdoor (5.7%), radio (2.8%) and cinema (1.0%).

But note that the press sector, as a whole, declined by 2.7%, with regionals suffering worst of all. Another reason, doubtless, for investors being concerned about pumping money into old media.

Finally, then, how do I explain my students' continuing enthusiasm for traditional media when, we suppose, they are the "digital natives" who will forge a brave new world? I'm afraid I can't. But I guess an essay question on those lines might elicit some answers. I'll let you know.